“Ghana hatches start-ups with high hurdles” – says Wall Street Journal’s Market Watch

28 February 2012

In a light blue, three-story concrete house in the suburbs of Ghana’s capital, young entrepreneurs are developing online applications they hope will make them into the Mark Zuckerbergs of Africa.

They spend long days and nights coding, strategizing and preparing to launch new software companies in an environment where competition is becoming stiffer and more Ghanaians are striving to create Web-based offerings they dream might become the next Facebook.

These entrepreneurs are the top graduates of the Meltwater Entrepreneurial School of Technology, an academy at the centre of one of the highest-profile efforts to boost software development in sub-Saharan Africa.

At the school’s incubator, as well as in other classrooms and informal gatherings around the country, a burgeoning number of tech-savvy people are charting the future of the Web in Africa and hoping to influence the world’s online ecosystem.

But they face high hurdles in a continent with low Internet penetration and poor infrastructure, as well as scant progress in literacy.

The Meltwater Entrepreneurial School of Technology campus. With the MEST Incubator facilities next door, trainees can interact with those starting new companies.

MEST, set up in 2008 by Jorn Lyseggen, a Norwegian tech entrepreneur and chief executive of the Meltwater Group, graduated its first 20 students in 2010 and 20 more last year.

At the light-blue incubator next door, graduates are using seed funding of between $30,000 and $200,000 to develop software businesses that will reach both Ghanaian and global markets.

“What we are trying to do is create a demonstration effect through companies and illustrate that software is a medium to achieve great things,” said Michael Szymanski, MEST’s director of business development.

Explosive growth in mobile Web

Many of the software firms being set up by the entrepreneurs at MEST are mobile-based, with developers acutely aware that most Africans now access the Internet via wireless phones.

In 1998, there were fewer than 4 million on the continent, but today there are around 500 million, according to the 2011 Mobile Africa Report, published by Internet organization Mobile Monday.

Ghana currently has a mobile-phone penetration of 80.5%, the country’s National Communications Authority says.

However, Ghana and Africa as a whole are still lagging far behind other nations and regions in terms of Internet usage and access.

The continent only has an Internet penetration rate of 11.4%, compared with the world average of 30.2%, according to Internet World Stats.

Ghana is well below the African average, with 5.2% penetration. But telecommunications companies such as Vodafone Group PLC VOD +0.59%, South Africa’s MTN Group Ltd. ZA:MTN +1.36% and Glo are expanding Internet service in Ghana. It may be just in time: Almost 40% of the population is under age 15.

Projects being developed at the MEST incubator include Claimsync, an online system for processing health-insurance claims; Saya, a Web-to-SMS chat application suitable for lower-end phones and BlackBerrys; and Streemio, a music-streaming service.

Another is Nandimobile, which makes software that companies can use to communicate with customers via SMS and search for patterns in queries so they can quickly respond to customer requests.

In February 2011, Nandimobile won the “Best Business” award at the Launch conference in San Francisco, in competition with almost 100 Silicon Valley start-ups.

More than MEST

Interest in tech development in Ghana extends well beyond MEST and its incubator. In the nation’s major cities including Kumasi, young techies are pushing the boundaries of software development, social networking, tweeting and blogging.

Forums like BarCamp, TEDx Ghana and events such as Accra Startup weekends — where software entrepreneurs have 54 hours to create a viable Web or mobile application and business model — attract hundreds of Ghanaians.

Chapters of the group Mobile Monday, which sprang up in different cities around the world about 10 years ago, meet monthly in Accra.

In Kumasi, weekly forums focus on the way in which mobile apps can be used to improve basic services in the country.

“When I’m at the Mobile Monday events, I feel like I am at any tech conference or informal meeting of tech entrepreneurs in Silicon Valley,” Szymanski said.